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Friday, September 30, 2016

Analysts: Producers May Have a "Short-Lived Window" of $4 Natural Gas in 2017

From SNL:
After spending much of 2016 stacking rigs and laying off workers, some shale gas drillers are coming off the bench in response to gas futures prices above $3/MMBtu, with $4/MMBtu gas possible in 2017 as demand briefly outstrips production, Sanford C. Bernstein & Co. analysts said. 
But a $4 handle would be "a short-lived window of opportunity," they said, as the combination of the mighty Marcellus Shale and Haynesville and Fayetteville shale production adds volumes to drive prices back down. 
Right now, according to Bernstein's calculations, there are half the number of "Marcellus-equivalent" rigs working in the U.S. — 52 — as are needed to keep supply flat over the next 12 months. For its Marcellus-equivalent calculation, Bernstein calibrates rig counts to compare with production in the powerful northeast Marcellus. 
Shale gas production, which is prone to rapid declines in the first two years of a well's life, will keep falling as producers conserve cash while export demand is growing, the analysts, led by Jean Ann Salisbury and Bob Brackett, said in a Sept. 28 note to clients. This should reinflate prices, they said, possibly above $4/MMBtu.
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Ohio Counties Continue to Reap Sales Tax Bounty From Shale

From The Intelligencer:
Officials in Belmont, Monroe, Harrison and Jefferson counties saw their total sales tax revenues jump by more than $21 million during the five years of the Marcellus and Utica shale boom, according to an industry-backed group. 
Officials with Washington, D.C.-based Energy In Depth said counties with drilling and fracking realized about a 65-percent increase, on average, in sales tax revenue from fiscal years 2011 to 2015. During this time period, companies have spent billions of dollars for drilling rights, as well as pipeline and processing infrastructure. 
“It really is all about the shale,” Monroe County Auditor Pandora Neuhart said. “It starts with the abstractors, then it goes to the drillers, the frackers, the truckers, the pipeliners. They are all here because of the shale.”
Would you like to read more.  Just click here! 

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Platts RigData Report: Demand for Rigs to Rise 29% in 2017 as Oil Prices Recover

From Bloomberg:
The biggest reboot of U.S. oil and gas rigs in two years will gain traction as higher prices prompt producers to resume investment in the most profitable plays, according to a report by Platts RigData. 
Demand for land rigs will rise 29 percent next year to 579, the S&P Global Platts unit said in a report released at the Benposium East conference in New York on Wednesday. Platts RigData forecasts average West Texas Intermediate crude prices to climb 23 percent to $52.18 a barrel in 2017. The Henry Hub natural gas benchmark is seen increasing 26 percent to $3.05 per million British thermal units. 
Producers from EOG Resources Inc. to Pioneer Natural Resources Co. are putting rigs back to work and buying acreage in some of the higher-return plays as they gear up to resume growth after crude prices rebounded. Oil got a further boost on Wednesday when the Organization of Petroleum Exporting Countries agreed on the outline of a deal that will cut production for the first time in eight years. Futures jumped as much as 6.2 percent in New York, extending their rally from this year’s low to about 80 percent.
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Was OPEC Too Late in Changing Policy on Production Cuts?

From Forbes contributor Robert Rapier:
In an article I wrote earlier this year — OPEC’s Trillion-Dollar Miscalculation — I speculated that if OPEC could go back in time to November 2014 we would likely have not seen oil prices crash as they did. Because at that time the cartel embarked upon a course of action that arguably had far greater financial repercussions than they expected. 
To review, OPEC, which is responsible for over 40% of the world’s oil production, has long attempted to function as the world’s swing producer for crude oil. If the world needed more oil production, OPEC would bring more barrels online. If demand declined, some production could be idled. The group believed that a stable price was the key to matching global supply and demand. 
Agreeing to production quotas was always a messy process, with competing factions within OPEC frequently having clashing objectives. But Saudi Arabia is by far OPEC’s largest producer, and the group historically falls in line with its desires. And that desire in November 2014 was to abandon the objective of attempting to balance the market. Following that meeting OPEC announced that it would defend market share that was being lost, in particular to rising shale oil production.
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Latest on Chesapeake Energy: SEC Filing Sheds Light on Extent of Legal Problems; Icahn's Rep Resigns From Board

Chesapeake Energy Corp. said Thursday it has received subpoenas from the U.S. Department of Justice (DOJ) and some states in connection with an investigation into whether it violated antitrust laws regarding natural gas and oil leasehold purchases, royalty payment practices and accounting methods for acquiring and classifying properties. 
In a U.S. Securities and Exchange Commission Form 8-K filing, the Oklahoma City-based producer reiterated an earlier disclosure, that it was subpoenaed by DOJ and state government agencies in connection with potential violations of antitrust laws relating to its purchase and lease of gas and oil rights. 
The filing also indicated that Chesapeake has received DOJ, U.S. Postal Service and state subpoenas "seeking information on our royalty payment practices. In addition, we have received a DOJ subpoena seeking information on our accounting methodology for the acquisition and classification of oil and gas properties and related matters."
Also from NGI (view fill article):
Chesapeake Energy Corp. said two of its directors, including a representative of No. 2 investor Carl Icahn, resigned effective Monday, less than a week after Icahn reduced by half his stake in the Oklahoma City-based natural gas producer. 
In a Form 8-K filing with the U.S. Securities and Exchange Commission, Chesapeake said John Lipinski, who was appointed in June 2014, and Icahn director Vincent Intrieri, appointed in June 2012, had resigned. 
According to the filing, the decision by both men was "not the result of any disagreement with the company on any matter relating to its operations, policies or practices." Lipinski had served on the audit and compensation committees. Intrieri, who was named to the board at Icahn's behest, has worked for Icahn-related entities since 1998. He served on Chesapeake's audit, finance and nominating, governance, and social responsibility committees.

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Columbiana County Hopes $5.1 Million Crane System is a Step Towards Economic Growth

From Business Journal Daily:
“We hope to make Columbiana County the fourth ‘C.’ With this, we can do it,” she said, referring to Ohio’s three largest economic centers – Cleveland, Columbus and Cincinnati. “This puts Columbiana County on the map and shows we can compete in the economic development world.” 
Traina, along with officeholders, contractors and port authority staff, cut the ribbon on the $5.1-million crane and conveyor system Sept. 23. The project was partially funded by a $3.5-million loan from Ohio Development Services, which could be changed to a grant, Columbiana County Commissioner Mike Halleck said. 
“This is an illustration of a wise investment on the part of the state government,” said state Rep. Tim Ginter, R-5 Salem. “In an age when people question the investment of government, this is a sterling example of an investment that will bring real jobs, real work, real income to our region.” 
The timing of the opening of the new crane comes at an incredibly opportune time, Traina adds, noting the soon-to-begin construction of an ethane cracker plant in Monaca, Pa., just 25 miles upstream from Wellsville, and a proposed cracker plant in Belmont County further downriver. 
“We’re poised right in the middle of all that growth,” the director said.
Continue this article by clicking here.

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Many Factors Affect Utica Shale Production Decline Curves

From Utica Shale Blog:
Production decline curves in the Utica Shale are impacted by a number of variables. In the first place, there is a natural decline over time, gas and liquids are finite and production inevitably declines. Fracking impermeable rock generates a flow path for trapped hydrocarbons and initial production can be quite large, though decline is inevitable as fractures and proppant no longer sustain flow and reservoir rock releases what it can. Unlike traditional wells where relatively porous and permeable rock is highly prized for it natural ability to permit hydrocarbons to enter the well bore and move to the surface, unconventional wells require coaxing via fracking. The fracking creates finite induced pathways for hydrocarbons to enter the wellbore and move up to the surface. 
Choke valve adjustment 
All wells use a choke valve which gives the operator control over how quickly hydrocarbons are allowed to escape out of the wellbore. Chokes valves are adjusted for a number of reasons and subject to experimentation and testing to optimize results. Reasons for choke adjustment could include: limiting choke in an attempt to maximize long term total production and flattening decline curves (experimental and based on learning and history), or maximizing or minimizing choke for other economic reasons.
Click here to read more and view a graphic illustrating the decline curve.

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Ohio Appeals Court: NEXUS Surveyors Can Come onto Private Property

From Bricker & Eckler:
On September 12, 2016, the Ohio Ninth District Court of Appeals affirmed a 2015 trial court ruling that an interstate natural gas pipeline company has authority to access private property to conduct surveys required to construct a 250-mile natural gas pipeline (read the ruling).

The ruling was affirmed under Ohio Revised Code 1723.01 after a group of landowners argued that the natural gas pipeline company could access private property to conduct surveys only if it was “necessary” for an appropriation action. The Ninth District Court of Appeals ruled that Ohio Revised Code 1723.01 was clear and unambiguous in authorizing a natural gas pipeline the right to enter upon private property to conduct survey activities even before any appropriation action is initiated and without a showing of necessity. 
Earlier this year, the Sixth District Court of Appeals reached a similar conclusion (read the ruling). The Sixth District Court of Appeals decision affirmed the pipeline company’s right to conduct surveys under both Ohio Revised Code 1723.01 and 163.03 after a group of landowners argued that the company needed a certificate from the Federal Energy Regulatory Commission (FERC) before it could be deemed a “private agency” authorized to enter properties to conduct surveys. The court held that because the company is authorized by R.C. 1723.01 to appropriate land, it is authorized to enter upon private property to conduct survey activities under Ohio law.
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Rice Energy Strikes "Transformational" Deal to Buy Vantage Energy

From the Pittsburgh Business Times:
Rice Energy executives say the key to its pending $2.7 billion acquisition of Vantage Energy is the 85,000 acres of natural gas holdings it will gain in Greene County, many of them adjacent to Rice's own holdings in the middle of the most productive part of the Marcellus Shale. 
Rice Energy (NYSE: RICE) made headlines Monday with its surprise announcement that it was acquiring Colorado-based Vantage Energy, which the company said would be a "transformational" move on the part of the Canonsburg natural gas driller. And in a conference call with analysts Tuesday, Rice executives pulled back the curtain on some of its strategy when the deal closes. One major takeaway: The acreage in Greene County, where Rice said it will focus much of its attention. 
“The fact that we can do it in our backyard makes it that much more appealing,” said Daniel Rice IV, CEO of Rice Energy.
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Thursday, September 29, 2016

EIA Looks at Increasing Utica Shale Focus on Natural Gas Production

From the Energy Information Administration:

graph of monthly oil and natural gas production from the Utica play, as explained in the article text
Source: U.S. Energy Information Administration and DrillingInfo Inc., June 2016
Note: The two vertical axes are scaled to present oil and natural gas production in roughly energy-equivalent terms.


Production of oil and natural gas in the Appalachian Basin's Utica play—which includes both the Utica and Point Pleasant formations—has increased significantly since 2012. Monthly natural gas production from Utica wells increased from 0.1 billion cubic feet per day (Bcf/d) in December 2012 to more than 3.5 Bcf/d in June 2016. Oil production increased from 4,400 barrels per day (b/d) to nearly 76,000 b/d over the same period.

map of Utica and Point Pleasant Oil and Gas Production through December 2012, as described in the article text

Source: U.S. Energy Information Administration based on DrillingInfo Inc., Appalachian Oil and Natural Gas Research Consortium, and U.S. Geological Survey
Note: EIA calculates the daily production rate for each well using the initial six contiguous months of liquid and gas production expressed in barrels of oil equivalent per day. Click to enlarge


Only 104 wells in the Utica play produced oil or natural gas in 2012, with most wells coming into production in 2013 or later, as shown on the maps above. Although the Utica play produces a mixture of oil and natural gas, recent development in the Utica has focused on natural gas. The rapid growth in Utica/Point Pleasant natural gas production since 2012 is attributable to increases in drilling efficiency, proximity to markets, improvements in business processes, resource targeting in stacked plays, and the lengthening of horizontal laterals. Relatively low oil prices and expansions in natural gas infrastructure make the natural gas-rich portions of the reservoir more desirable for development, and therefore, increasingly the target for operators.

The relative portions of natural gas and oil in a particular formation can be represented by mapping initial gas-to-oil ratios (GORs). GORs characterize the ratio of natural gas to oil produced from a well, expressed in standard cubic feet per barrel—scf/b. The distribution of oil and natural gas in a formation is partially controlled by the thermal maturity of a rock, which is an indication of potential hydrocarbon generation.

Crude oil and natural gas are produced by the heating of organic materials (i.e., kerogen) found in some rocks over long periods of time. When organic-rich rocks, usually shales, are buried, they are exposed to increasing temperatures and pressures. Heating causes the organic matter to change into the waxy material known as kerogen, then into oil, and finally into natural gas as the temperature further increases.

map of Initial gas-to-oil ratios (GORs) of Utica and Point Pleasant wells (through June 2016) and thermal maturity, as described in the article text

Source: U.S. Energy Information Administration based on DrillingInfo Inc., Appalachian Oil and Natural Gas Research Consortium, U.S. Geological Survey, and various state agencies
Note: EIA calculates GOR for each well using the initial six contiguous months of liquid and gas production. Click to enlarge


The temperature ranges conducive to converting organic material to oil and natural gas are referred to as the oil window and the gas window, respectively. The oil window typically occurs at temperatures between 60 degrees and 120 degrees Celsius, while the natural gas window occurs between 100 degrees and 200 degrees Celsius. Although this temperature range is found at different depths below the surface throughout the world, a typical depth for the oil window in the Utica play is 4,000 feet to 8,000 feet, and the corresponding gas window is 7,000 feet to 12,000 feet.

In the map above, natural gas-rich wells in the Utica play are mostly located in the eastern portion of the play, and oil-rich wells are typically located in the western portion. The distribution of initial GORs generally corresponds to the depth of the reservoir. Deeper wells (up to 13,000 feet) in the eastern portion have higher initial GORs (greater than 10,000 scf/b) and produce mostly natural gas, while the shallower wells to the west have lower initial GORs (less than 10,000 scf/b) and produce mostly oil.

Recent updates to EIA's maps and geologic information for the Utica play help to describe the formations' production, gas-to-oil ratios, and other geologic characteristics. This information provides a better understanding of recent production within the context of key geologic parameters.

Principal contributors: Olga Popova, Gary Long, Chris Peterson
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Wednesday, September 28, 2016

Permitting Resumes in Utica Shale; Rig Count Climbs; 1,800 Wells Now Drilled

The latest weekly Utica shale permitting report from the Ohio Department of Natural Resources reveals that activity picked back up a bit last week after no permits were issued the previous week.  Five new permits were issued last week, while the rig count jumped back up to 18.  2,246 permits are now issued, 1,800 wells drilled, and 1,398 wells are producing in Ohio's Utica shale.

View the report below or by clicking here.



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OPEC Reaches Deal to Limit Output, Sending Oil Prices Up

From Reuters:
Oil prices settled up nearly 6 percent on Wednesday after OPEC struck a deal to limit crude output at its policy meeting in November, its first agreement to cut production since 2008 and after the market crashed on oversupply. 
The Organization of the Petroleum Exporting Countries reached agreement to limit its production to a range of 32.5-33.0 million barrels per day (bpd) in talks held on the sidelines of the Sept. 26-28 International Energy Forum in Algiers, group officials told Reuters.

OPEC estimates its current output at 33.24 million bpd. 
"We have decided to decrease the production around 700,000 bpd," Iranian Oil Minister Bijan Zanganeh said.

OPEC will agree to production levels for each member country at its Nov. 30 meeting in Vienna, group officials said. After reaching its group target, it will seek support from non-member oil producers to further ease the global glut.
Click here to read more.

This news, which many no doubt feel is long overdue, pushed oil prices up to the highest levels seen in recent weeks.  Brent Crude reached as high as $48.96 before settling at $48.69, while West Texas Intermediate (WTI) rose to $47.45 before finishing the day at $47.05.

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Tuesday, September 27, 2016

Gas-Fired Power Plant Announced for Harrison County; Columbiana County Plant Receives State Approval

It has been a big week for new natural gas-fired power plants in Ohio.  First, a previously announced $1.1 billion project in Columbiana County got approval from the Ohio Power Siting Board, and construction is scheduled to begin in January 2017.

Then a $900 million investment for another plant in Harrison County was announced.

First, from Dayton Business Journal:
Ohio regulators have approved a $1.1 billion natural-gas-fired power plant in eastern Ohio, a project that locals say will significantly boost the area. 
The Ohio Power Siting Board gave the go-ahead to Boston-based Advanced Power Services on a 1,105-megawatt power plant in Columbiana County. It's enough to power about a million homes, the company said. 
The county, one of the prime spots for oil and gas development related to Ohio’s Utica shale play, has $4.4 billion of tangible assets, County Commissioner Tim Weigle said in recent regulatory testimony on the plant, operated by subsidiary South Field Energy. 
“So they’re willing to invest one quarter of our entire worth in Columbiana County. That is extreme,” he said in support of the plan.
Then there is this report from WTOV 9 on the new plant being planned in Harrison County:




The Harrison County Community Improvement Corporation announced Thursday that a 1,000 megawatt natural gas-fired electrical power generation facility will be constructed in the Harrison County Industrial Park.

The facility will provide enough electricity to power a million homes and bring capital investment of more than $900 million to Harrison County, according to Raj Suri, CEO of EmberClear, the company that will build the facility.


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Friday, September 23, 2016

U.S. Chamber of Commerce Imagines What Economy Would Look Like if Shale Boom Hadn't Happened

From NGI:
The U.S. economy would be "much weaker" if the energy renaissance had not occurred, the U.S. Chamber of Commerce said in a report outlining the jobs and financial gains resulting from unconventional drilling. Researchers also highlighted some of the biggest benefactors: Ohio, Pennsylvania, Texas and Wisconsin. 
The report, "What if America's Energy Renaissance Had Not Actually Happened?" is the second in a series by the Chamber's Institute for 21st Century Energy. Researchers compiled data from 2009 through 2015 to imagine the U.S. economy minus the plethora of oil and natural gas reserves uncovered in shale, sand and other formations now being tapped by hydraulic fracturing and horizontal drilling. 
"The 'Keep It in the Ground' movement completely ignores the vast benefits to our nation's economy that the energy renaissance has brought to us," Institute CEO Karen Harbert said. "For instance, lower electricity and fuel prices spurred a comeback in manufacturing that alone is responsible for nearly 400,000 jobs. It costs consumers less to drive a car and heat their homes today. And all the while, our nation has been decreasing its energy imports and lowering emissions." 
Because of the energy renaissance, U.S. natural gas import levels have declined by 73%, while oil imports have fallen by 62%, the researchers said.
The whole article is available by clicking here.

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Trump Voices Support for Fossil Fuels at Shale Event in Pittsburgh

From The Hill:
Republican presidential nominee Donald Trump on Thursday accused his Democratic opponent of seeking a “war on energy,” and promised to slash regulations that he says are holding back fossil fuels. 
Hillary Clinton’s energy policies would cost the United States $5 trillion, Trump said in a speech at a natural gas conference. He added that Clinton wants “to put the coal miners out of work, ban hydraulic fracking in almost all places and extensively restrict and ban energy production on public lands and in most offshore areas."

The billionaire businessman predicted "devastation for states like Pennsylvania, Ohio, West Virginia and so many others, where shale oil and shale energy and coal and coal production are critical parts of the economy.” 
Trump used the speech in Pittsburgh, the heart of the Marcellus Shale gas boom of recent years, to pitch his energy, economic and tax agendas to gas executives. He spoke highly of what the gas boom, spurred by hydraulic fracturing, has done to the country’s economy and security.
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Sand Declared the "Unsung Hero" of Battle Between OPEC and U.S. Shale

From Oilprice.com:
The late-2014, Saudi-initiated oil-price war may have taken the ‘boom’ out of the US shale industry as it seriously threatened OPEC market share, but Saudi victory has been elusive: US shale has proven amazingly resilient. The industry has adapted quickly to the new playing field, and the unsung hero of a new uptick in drilling and investment isn’t just true grit—it’s sand. 
The Saudi victory is equally dulled by the fact that it was not a decline in US shale production that rebalanced supply and demand; rather, it was chaos in Libya, militant attacks in Nigeria, massive fires in Canada and the destabilization of OPEC’s own Venezuela. 
US shale made good use of the down-time to regroup and innovate. And now, with the drilling rig count consistently rising, drilling activity coming back on track and new investment surfacing in our favorite shale patches, it is perhaps ironic that the dessert Kingdom should find sand its new enemy in the next phase of this battle for market share.

Sand has been the most significant innovation on the US shale playing field. 
“North American producers are rapidly increasing efficiency and reducing production costs, and we’re just at the beginning of this innovation curve,” says Select Sands Corp.CEO Rasool Mohammad.
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Wednesday, September 21, 2016

Emails to Sierra Club Show EPA Policy Chief's Frustration with White House Approach to Fracking Regulation

From the Washington Free Beacon:
A senior Environmental Protection Agency official privately complained about “dickheads” in the White House who resisted efforts to regulate an innovative oil and gas extraction technique, newly released documents show. 
Michael Goo, then the EPA’s policy chief, complained to a Sierra Club lobbyist that the White House Office of Management and Budget was resisting efforts to regulate hydraulic fracturing, or “fracking.” 
“If you want any hope of regulation of fracking then give us more time to try and remove the gun from our head and talk sense into OMB dickheads,” Goo wrote to John Coequyt, the Sierra Club’s top climate policy official and one of its team of D.C. lobbyists
Goo and Coequyt worked extensively behind the scenes to craft major EPA policies under Obama, including, these text messages show, the agency’s first major fracking regulations.
The rest of the article can be read by clicking here.

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Carl Icahn Sells Over 50% of His Chesapeake Energy Stock at a Loss

From the Wall Street Journal:
Activist investor Carl Icahn has exited more than half of his stake in Chesapeake Energy Corp., citing tax-planning reasons. 
Mr. Icahn reported a 4.55% stake in the energy company, compared with 9.4% in August. 
In a statement, Mr. Icahn said “we believe that over the past few years Doug Lawler and his team have done an admirable job, especially in light of the circumstances. We reduced our position to recognize a capital loss for tax-planning purposes.” 
Chesapeake shares fell 4.4% to $6.51 in after-hours trading.
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Ohio Supreme Court Keeps Anti-Drilling Charters Off Ballots in Three Counties

From NGI:
The Ohio Supreme Court ruled Tuesday that Secretary of State Jon Husted and the election boards from three counties did not violate the law when they rejected proposed county charters that, if successful, could have led to local bans on oil and natural gas development. 
In a slip opinion, the state's high court ruled 6-1 that supporters of the proposed charters were not entitled to a writ of mandamus that would have placed the charters on the ballot in November. The case is State ex rel. Coover v. Husted [No. 2016-Ohio-5794]. 
According to court records, election boards in Athens, Meigs and Portage counties rejected the proposed charters for a variety of reasons last year. Husted subsequently invalidated similar petitions in Athens, Fulton and Medina counties (see Shale Daily,Aug. 14, 2015).
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Tuesday, September 20, 2016

No New Permits and Rig Count in Decline on Latest Utica Shale Report

The latest weekly permitting report from the Ohio Department of Natural Resources shows another decline in activity.  No new permits are listed on the report for the week ending September 17.  The rig count fell from 16 to 14.

There are now 2,240 permits issued, 1,797 wells drilled, and 1,398 wells producing.

View the report below or by clicking here.



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Monday, September 19, 2016

Last Week's News Rundown

We're back from vacation (the first time since the inception of The Daily Digger that I've actually taken a week off from this), so things will get back to normal this week.

First, though, here are some of the stories that we didn't get to post about last week.

Companies Remain Confident That Utica Shale Drilling Will Pick Up
While Utica Shale brought much disappointment to many area businesses, at least two companies are confident drilling will resume. 
Just a few years ago, Utica Shale, part of the Appalacian Basin, became a major natural gas and oil producer. Southeast Ohio saw a surge in lease activity, pipeline projects and hiring. Prosperity trickled through the economy to...
New Genus of Bacteria Found Living in Fracked Wells
Researchers analyzing the genomes of microorganisms living in shale oil and gas wells have found evidence of sustainable ecosystems taking hold there—populated in part by a never-before-seen genus of bacteria they have dubbed “Frackibacter.” 
The new genus is one of the 31 microbial members found living inside two separate fracturing wells, Ohio State University researchers and their colleagues report in the Sept. 5 online edition of the journal Nature Microbiology.
Geologist Says $70 to $80 Oil Prices Are Key to More Ohio Drilling
The domestic gas and oil industry may have plummeted in Guernsey County and elsewhere around the country, but it will rebound, predicted David R. Hill, a geologist and an oil and natural gas producer from Byesville. 
Hill offered his assessment recently during a Coffee and Commerce meeting sponsored by the Cambridge Area Chamber of Commerce. 
He reported that the domestic component of the industry is suffering "pain" because of a decision by the Organization of Petroleum Exporting Countries to flood the world oil markets with an excess supply of crude oil.
Landowners Continue Battle Against UTOPIA Pipeline 
Kinder Morgan officials said the hundreds of eminent domain lawsuits they filed against landowners in the path of the Utopia Pipeline are just part of the building process, but an attorney representing numerous property owners said the company is just trying to intimidate them into signing “lowball” contracts.
Is Chesapeake Energy Planning to Reduce Focus on Utica Shale Next Year?
"When you think about the Eagle Ford and you think about a traditional Eagle Ford well that brings on a decent amount of oil and looks pretty good and it costs $2.1 million, that's a pretty attractive set of economics. And now you put that against the higher oil recoveries of a 10,000-foot lateral and doing so at a well cost that's just a little over $4 million, and it's pretty attractive," he said. 
Dell'Osso said Chesapeake will expend "a little bit more" capital in the Utica Shale in 2017, but its focus remains elsewhere. If the company changes its mind, he said, it has the ability adapt quickly.
Opponents Lining Up to Shoot Down Youngstown Fracking Ban Yet Again
The press event Tuesday morning in the hall of Teamsters Local 377 could have been a scene from the 1993 fantasy-comedy movie “Groundhog Day,” except as Mayor John A. McNally noted, “This is not something for us to joke about.” 
The something was the sixth point-by-point rebuttal by the Mahoning County Coalition for Job Growth and Investment to the sixth effort of Committee for the Youngstown Community Bill of Rights to amend the Youngstown Charter Nov. 8 and ban the business of energy extraction within city limits.
NEXUS Pipeline Clears Another Hurdle with Approval of Compressor Stations
Ohio EPA has issued five air permits-to-install-and-operate compressor stations intended to facilitate delivery of natural gas along the Nexus Gas Transmission (NGT) pipeline. 
The permits were issued as final for facilities at the following locations: 
Clyde - Sandusky County (east of Pickle Street/south of I-90)
Hanoverton - Columbiana County (near State Route 644 and Ridgeway Road)
Salineville -Columbiana County (Yellow Creek Road)
Wadsworth/Guilford Township - Medina County (north of I-76 on Guilford Road)
Waterville - Lucas County (Moosman Drive, south of Neapolis-Waterville Road)
Seven New Permits Issued for Utica Shale Drilling During the Week Ending September 10



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Thursday, September 8, 2016

Budgetary Cutbacks on Exploration Prompt Fears of Future Oil Shortfall

From Fuel Fix:
Explorers in 2015 discovered only about a tenth as much oil as they have annually on average since 1960. This year, they’ll probably find even less, spurring new fears about their ability to meet future demand. 
With oil prices down by more than half since the price collapse two years ago, drillers have cut their exploration budgets to the bone. The result: Just 2.7 billion barrels of new supply was discovered in 2015, the smallest amount since 1947, according to figures from Edinburgh-based consulting firm Wood Mackenzie. This year, drillers found just 736 million barrels of conventional crude as of the end of last month. 
That’s a concern for the industry at a time when the U.S. Energy Information Administration estimates that global oil demand will grow from 94.8 million barrels a day this year to 105.3 million barrels in 2026. While the U.S. shale boom could potentially make up the difference, prices locked in below $50 a barrel have undercut any substantial growth there. 
New discoveries from conventional drilling, meanwhile, are “at rock bottom,” said Nils-Henrik Bjurstroem, a senior project manager at Oslo-based consultants Rystad Energy. “There will definitely be a strong impact on oil and gas supply, and especially oil.”
The whole article can be read by clicking here.

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How Have Landmen Responded to the Oil and Gas Industry Downturn?

From Powersource:
This is Mark Acree’s fifth oil and gas downturn. He’s been a landman in the business for 37 years and, each time it cycles down, there’s something old and something new. This time, he said, the something old is him. Keep in mind, he’s only 57. 
It’s been a year and a half since Mr. Acree was laid off from Noble Energy Corp. where he spent three years as a senior land manager. Like many oil and gas firms, Noble has had several rounds of layoffs since the downturn began in 2014, with falling natural gas and oil prices. 
“I’m used to being a guy who worked for large corporations who pedaled pretty fast,” he said.

The pace and the attitude was “just get it done,” he said. “Keep going, keep going, do what it takes to get it done.” 
When the latest downturn hit, the focus shifted to cost-cutting and Mr. Acree believes the land profession has seen some of the worst of it — especially managers with many years of experience and more zeros on their paychecks. 
“The companies trying to cheapen themselves up by retaining lesser priced (employees) are thinking they’re going to train them up during the downturn,” he said. “Who’s going train them?”
It is a good question, one of many that face the industry as it plans for the eventual ramp up of activity that will inevitably come.  Read the rest of the article by clicking here.

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How Are American Consumers Paying Oil Pipeline Taxes?

From The Daily Beast:
The idea that any business could force you to pay its taxes may strike some readers as beyond belief. When I first heard about this more than a decade ago my skepticism meter hit high alert. Then I started reading the laws, regulations, and official proceedings, none of which made the news. I’ve been writing about it ever since, hoping the public will demand an end to this abuse. 
The way it works is simple: The Federal Energy Regulatory Commission (FERC) sets the rates that monopoly pipelines can charge. The rates are based on all of their costs—people, equipment, taxes, and the corporate income tax. But that last expense is fake. The pipelines are exempt from that tax. 
How Consumers End Up Paying Oil Pipeline Taxes 
No industry benefits more from the forced payment of taxes for private gain than the pipelines that are the subject of the latest court ruling. 
Pipelines are monopoly rights-of-way granted by government. The rates that oil pipelines charge shippers—oil companies, airlines, chemical companies—to move their product across the country are regulated under a law first enacted in 1887, the Interstate Commerce Act, which was designed to protect shippers from abuses by railroads—and was partly drafted by those railroads. Natural gas pipelines are regulated under updates to a 1938 law.
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Wednesday, September 7, 2016

Groups Call For Investigation Into Letters to FERC in Support of NEXUS Pipeline

From Cleveland Scene:
The public comment period for the NEXUS pipeline's environmental impact statement has ended, and opponents of the project are crying foul. Banding together, representatives from multiple groups are requesting an investigation into what they deem to be hundreds of forged letters of public comment — all in support of the pipeline project. 
Michigan resident Paul Wohlfarth spent much of the last month investigating letters from 14 people that praise the pipeline(which is set to run in part through Lorain and Medina counties). He said he contacted those people listed as the authors, and what he learned cast doubts upon the record of public comment. In all, Wohlfarth flagged "possibly 200 comment statements" of dubious origin.

"This is an extremely serious matter," attorney Terry Lodge wrote in a filing with the Federal Energy Regulatory Commission this week. "In one instance, the party purportedly signing the letter has been deceased since 1998."
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PA-Based Company Trying to Raise Money for Horizontal Drilling in Ohio

From the Pittsburgh Business Times:
Bryan Investment Group is raising a $25 million fund, largest in its 45-year history. 
The Canonsburg-based family business plans to use the capital to drill wells, but the reason its goal for Bryan Energy LP increased 10-fold is because it is branching into more expensive horizontal wells, President and General Managing Partner Richard Bryan said. 
“It costs more to drill horizontally, but that’s the way wells are being done these days,” Bryan said. “The dynamics have changed.” 
Bryan Investment has developed and managed more than 600 natural gas and oil wells, located in Pennsylvania, Ohio, Kentucky and Wyoming, since 1971. It initially raised money for other drillers, “bigger players like Atlas,” he said. But about 10 years ago, it decided to open its own drilling company.
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Tuesday, September 6, 2016

September 2016 Shale Activity Maps Published by ODNR





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Report Claims to Link Childhood Asthma to Fracking

From a press release by the Ohio Environmental Council:
Today, the Ohio Environmental Council and the Clean Air Task Force released a new analysis showing that 7,129 childhood asthma attacks in the Columbus metro area, and 7,558 in the Cleveland metro area each year are due to smog resulting from oil and gas operations.  
 
“What this report clearly shows us is that air pollution from the oil and gas industry can have a significant impact on children’s health even in areas far from oil and gas production” said, Melanie Houston, Director of Oil and Gas at the Ohio Environmental Council. “As the mother of a young child, I can’t stress enough that safeguards are urgently needed to protect our children and communities from this dangerous pollution. Cutting methane pollution from oil and gas will have an immediate benefit for our children.”
Read the whole release here.

The Ohio Environmental Council is an activist organization that is firmly opposed to oil and gas drilling.

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Wayne County Residents Feeling Pressure on NEXUS Pipeline Plans

From Gas & Oil:
Wayne County is now on the clock. 
The phrase is overused as it relates to the NFL's rookie draft, but it was essentially the message from a Farm Bureau official to residents and elected officials throughout Wayne County during a series of meetings regarding the NEXUS pipeline project. 
Because of the possibility the NEXUS pipeline could be rerouted from the northeastern corner of the county to the southern and western portions of Wayne, the Wayne County Farm Bureau has been organizing these meetings led by Dale Arnold, director of energy for the Ohio Farm Bureau Federation based in Columbus. 
Arnold has been talking to farmers, property owners, concerned citizens and elected officials to stress how important it is for them to share comments with the Federal Energy Regulatory Commission.To the Chippewa Township trustees and residents in and around Doylestown, the NEXUS pipeline is nothing new. They have been battling its potential construction on every front. As Trustee Lenny Broome said, he and his colleagues want to see it rerouted and moved out of the township.
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Monday, September 5, 2016

Breaking Down the 2nd Quarter 2016 Utica Shale Production Data

The Ohio Department of Natural Resources has now released the production data from the Utica shale for the second quarter of 2016. As always, we are going to give you a look at how the numbers compare to past quarters, past years, and how they break down among the various drillers who are active in Ohio and the counties where they are drilling. We also have the top 10 oil and gas wells detailed below.

First up, let's take a look at how the quarterly data compares from the 1st quarter of 2014 through the second quarter of 2016.  As a reminder, all oil figures are 42-gallon barrels, and all gas production is measured in MCF:


QUARTER# OF WELLS/# WITH DATAOILGASDAYSOIL/DAYOIL/WELLGAS/DAYGAS/WELL
2014-1 476/4181,950,97967,333,94528,019704,6672,403161,086
2014-2562/5042,467,28388,673,74137,922654,8952,338175,940
2014-3717/6743,013,667132,017,38650,858594,4712,596195,871
2014-4828/7793,558,836164,815,00862,527574,5682,636211,573
2015-1926/8774,432,304183,585,25569,745635,0192,632209,333
2015-21020/9785,594,633221,860,16980,724695,7042,748226,851
2015-31134/10875,709,858245,747,68684,283685,2422,916226,079
2015-41265/12306,249,116302,505,428102,378615,0812,955245,939
2016-11351/13035,485,854329,537,838110,699504,2102,977252,907
2016-21415/13654,839,792334,257,982118,036413,5462,832244,878

Continuing the trend noticed in the first quarter results, oil production continues to slide.  This time gas production joined in.  While overall gas production increased, rates per well and per day in production both dropped.

The drop in oil production is clearer to see in this graph:



Next we look at the yearly production from 2011 to 2015 and see how it compares to the production through two quarters of 2016:


YEAROILGAS
201146,3262,561,524
2012635,87412,831,292
20133,677,734100,119,054
201410,990,765452,840,080
201521,985,911953,887,763
2016 YTD10,325,646663,795,820
TOTALS47,662,2562,186,035,533

Here are the top 10 oil-producing wells of the quarter:


OPERATORCOUNTYWELL NAME/NO.OILOIL/DAY
ECLIPSE RESOURCES I LPGUERNSEYPURPLE HAYES 1H710721225
ASCENT RESOURCES UTICA LLCGUERNSEYEGGLESTON WLS GR 2H50074550
ASCENT RESOURCES UTICA LLCGUERNSEYEGGLESTON WLS GR 4H49885548
CHESAPEAKE EXPLORATION LLCHARRISONDEMIS 12-12-6 1H41886460
CHESAPEAKE EXPLORATION LLCHARRISONWILLIAM DENOON 17-12-6 4H36408400
CHESAPEAKE EXPLORATION LLCCARROLLDELMAR 24-13-6 7H35903408
CHESAPEAKE EXPLORATION LLCHARRISONWILLIAM DENOON 17-12-6 2H35372389
CHESAPEAKE EXPLORATION LLCHARRISONWILLIAM DENOON 17-12-6 1H34173376
ECLIPSE RESOURCES I LPGUERNSEYFRITZ UNIT 7H34007378
ASCENT RESOURCES UTICA LLCGUERNSEYRED HILL FARM MDS GR 1H32601358

And the top 10 gas-producing wells from the second quarter:


OPERATORCOUNTYWELL NAME/NO.GASGAS/DAY
CNX GAS COMPANY LLCMONROEBREWSTER SWITZ6DHSU1,615,882 17,757
ECLIPSE RESOURCES I LPMONROEFUCHS A 4H1,593,854 17,709
RICE DRILLING D LLCBELMONTMOHAWK WARRIOR 12H1,515,979 16,659
CNX GAS COMPANY LLCMONROEBREWSTER SWITZ6FHSU1,495,736 16,437
RICE DRILLING D LLCBELMONTMOHAWK WARRIOR 8H1,494,753 16,426
ASCENT RESOURCES UTICA LLCHARRISONCRAVAT COAL SHC HR 2H1,465,010 16,099
RICE DRILLING D LLCBELMONTMOHAWK WARRIOR 10H1,410,796 15,503
ECLIPSE RESOURCES I LPMONROEDIETRICH C 4H1,395,538 15,506
GULFPORT ENERGY CORPBELMONTEDGE 210126 2A1,382,144 15,530
GULFPORT ENERGY CORPBELMONTEDGE 210021 1D1,379,785 15,503

Here is a breakdown of the data by county:


COUNTY# OF WELLS TOTAL# OF WELLS PRODUCINGOILGASDAYSOIL/WELLOIL/DAYGAS/WELLGAS/DAY
Belmont19817754,797103,209,08214,2513104583,1027,242
Carroll4324301,123,14051,996,10338,7092,61229120,9211,343
Columbiana666022,4739,303,5235,4453754155,0591,709
Coshocton1117110,11991171210,119111
Guernsey1171161,287,44312,036,2429,73411,099132103,7611,237
Harrison2772731,836,49350,902,25923,4516,72778186,4552,171
Jefferson24211177,591,409183560361,4964,137
Mahoning13112,471692,546769225362,959901
Monroe14213971,74870,284,36812,0675166505,6435,825
Morgan225,64274,3481822,8213137,174409
Muskingum1137412,18191374412,181134
Noble116116409,05727,152,85710,1883,52640234,0762,665
Portage4102,19016002,190137
Stark2282640,456181413520,228224
Trumbull441,38595,270280346523,818340
Tuscarawas7619,036141,4082963,1736423,568478
Washington954,619713,62145092410142,6521,585



And finally, the data broken down by operator:

OPERATORTOTAL # OF WELLS# OF PRODUCING WELLSOILGASDAYSOIL/WELLOIL/DAYGAS/WELLGAS/DAY
Antero Resources Corporation138 137 289,118 53,536,464 12,234 2,110 24 390,777 4,376
Artex Oil Company6 6 3,550 125,800 546 592 7 20,967 230
Ascent Resources Utica LLC87 87 914,267 26,526,375 7,182 10,509 127 304,901 3,693
Atlas Noble LLC12 12 14,622 1,504,022 1,080 1,219 14 125,335 1,393
Carrizo (Utica) LLC4 3 55,207 247,417 212 18,402 260 82,472 1,167
Chesapeake Appalachia LLC6 4 19 1,101,172 364 5 - 275,293 3,025
Chesapeake Exploration LLC631 620 2,219,397 86,688,862 55,030 3,580 40 139,821 1,575
Chevron Appalachia LLC8 6 61,526 386,317 546 10,254 113 64,386 708
CNX Gas Company LLC42 41 142,471 10,584,373 3,003 3,475 47 258,155 3,525
Eclipse Resources I LP55 55 442,187 14,073,151 4,918 8,040 90 255,875 2,862
EM Energy Ohio LLC2 1 - 758,896 83 - - 758,896 9,143
Enervest Operating L5 5 3,470 60,714 455 694 8 12,143 133
EQT Production Company6 6 8,699 96,387 531 1,450 16 16,065 182
Gulfport Energy Corporation187 187 248,064 71,959,258 15,719 1,327 16 384,809 4,578
Halcon Operating Company Inc5 5 2,053 119,371 370 411 6 23,874 323
Hess Ohio Developments LLC59 56 135,631 19,554,180 4,508 2,422 30 349,182 4,338
Hilcorp Energy Company10 9 - 1,500,361 784 - - 166,707 1,914
Mountaineer Keystone LLC2 - - - - - - - -
NGO Development Corp.1 1 171 10,119 91 171 2 10,119 111
PDC Energy Inc23 23 115,218 792,938 2,088 5,009 55 34,476 380
Protégé Energy III LLC1 1 2,762 556,267 91 2,762 30 556,267 6,113
R E Gas Development LLC38 38 133,201 3,194,608 3,152 3,505 42 84,069 1,014
Rice Drilling D LLC37 25 - 23,311,713 2,039 - - 932,469 11,433
Statoil USA Onshore Prop Inc8 6 27,915 490,370 546 4,653 51 81,728 898
Triad Hunter LLC12 8 18,782 1,882,924 736 2,348 26 235,366 2,558
XTO Energy Inc.30 23 1,462 15,195,923 1,728 64 1 660,692 8,794




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